‘Daewoo Videocon deal closing by end-Dec’
South Korean appliance maker Daewoo Electronics expects to finalise its sale to a consortium led by Videocon Industries Ltd. by the end of December, the company said on Tuesday.
More details of the deal will be released once a memorandum of understanding is signed by the end of September, Daewoo said in a statement.
Videocon and RHJ International, the holding company of U.S. buyout fund Ripplewood, were picked Friday as the preferred bidder to buy Daewoo Electronics.
Officials from Daewoo’s creditor banks have declined to reveal the bid price, but a South Korean newspaper said the Videocon consortium offered 670 billion to 680 billion won ($699.7 million-$710.2 million).
Videocon Chairman Venugopal Dhoot also declined to disclose the price, citing a non-disclosure agreement. a leading economic daily, however, reported in its Tuesday edition that Videocon was planning to pay 670 billion to 680 billion won.
Daewoo Electronics CEO Lee Seung-chang on Tuesday denied knowledge of the sale price, saying only that he was "disappointed" that Daewoo’s assets had been ‘undervalued’ by the purchasing group.
Creditor officials have said they wanted to sell Daewoo for more than $1 billion, taking into account its assets and business outlook. Domestic creditors own 97.5 per cent of the unlisted firm.
Daewoo posted losses in 2005 and its earnings forecasts were not available.
Lee also said he did not expect the company to post a profit for 2006, because the company has not made enough of an investment.
Lee said Daewoo will ask Videocon to increase its investment as the former unit of the failed Daewoo Group needs to finance more research and development on flat panels and also build more plants for refrigerators.
He declined, however, to specify the amount of investment Daewoo seeks.
ABN AMRO, Woori Investment & Securities Co. and Samil PricewaterhouseCoopers are managing the sale.
Daewoo Electronics, which was placed under a debt rescheduling programme after its parent group went bankrupt in 1999, has since streamlined its business, focusing on televisions, air conditioning units and refrigerators.
Daewoo operates six plants in South Korea and 18 overseas units. Its assets totalled 1.65 trillion won ($1.72 billion) at the end of 2005.
The company swung to a 94 billion won net loss in 2005 from a 30.4 billion won in net profit in 2004, according to the company’s audit report, as a stronger won currency put pressure on its export-led business. Its sales were 2.16 trillion won last year.
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